MBA Responds to CFPB’s Proposed Rule Revising the General Qualified Mortgage Definition
On Tuesday, the Mortgage Bankers Association commented on the Consumer Financial Protection Bureau’s proposed rule to amend its General Qualified Mortgage (QM) loan definition in Regulation Z.
The letter to Consumer Financial Protection Bureau Director Kathleen Kraninger explained MBA’s support for the price-based QM construct proposed by the CFPB and offered several recommendations to help ensure the rule meets its stated goals of robust consumer protections and broad access to sustainable credit.“MBA commends the Bureau for this proposal and its commitment to ensure the continued availability of sustainable, affordable mortgage credit, while maintaining robust standards for high-quality QMs,” said Mortgage Bankers Association President and Chief Executive Officer Robert Broeksmit, CMB.
Broeksmit called the Ability-to-Repay/Qualified Mortgage (ATR/QM) Rule “one of the most important mortgage regulations promulgated by the Bureau pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.”
Because efforts to revise the ATR/QM Rule, particularly efforts as extensive as those reflected in the CFPB’s proposed rule, will have significant implications for the housing finance system, MBA lauded the CFPB for its thorough approach to this critical rulemaking, which has involved extensive outreach to industry and consumer groups, receptiveness to stakeholder feedback and a commitment to a data-driven process.
“The proposed revisions to the General QM definition, as well as the proposed short-term extension of the government-sponsored enterprise (GSE) Patch, reflect an appropriate careful consideration of the Bureau’s statutory duties and the goals of the ATR/QM Rule,” the letter said. “In the comments that follow, MBA explains its support for the price-based QM construct proposed by the Bureau and offers several recommendations to help ensure the rule meets its stated goals of robust consumer protections and broad access to sustainable credit.”
Specifically, MBA said it:
–Supports the Bureau’s proposal for a QM construct based on a spread of loan price against the average prime offer rate (APOR) benchmark;
–Supports the Bureau’s proposal to eliminate debt-to-income (DTI) ratio as a standalone factor for eligibility under the General QM definition;
–Offers recommendations to clarify the eligibility criteria for the proposed General QM definition;
–Recommends that the Bureau raise the proposed rate spread threshold that designates a conclusive presumption of ATR compliance (safe harbor) for QM loans;
–Recommends that the Bureau remove the special rule for determining QM eligibility for certain adjustable-rate mortgages (ARMs); and
–Offers recommendations to ensure a successful implementation of the revisions to the General QM definition. The full letter is available here.